Proposed amendments to the law covering oil and gas activity on First Nations reserves will eventually enable more bands to get involved in the petroleum industry, says the president and CEO of the Indian Resource Council (IRC).

Roy Fox says the changes to the Indian Oil and Gas Act, recently introduced by Indian Affairs and Northern Development Minister Chuck Strahl, do not ensure more First Nations involvement in the sector. But he believes the revised law's new regulations, which apply to oil and gas activity on reserves, and on which his group is collaborating with Ottawa, will create more opportunities for First Nations.

"The amendments are all part of the continuous-change process that we've been working on, whereby we would be working towards more independence for our First Nations members and their corporations and their business people in doing business in the oil and gas sector," says Fox.

Based on the Tsuu T'ina Nation southwest of Calgary, the IRC represents about 130 bands conducting oil and gas activity in B.C., Alberta, Saskatchewan, Manitoba, Ontario, part of the North and the Maritimes.

The IRC's board is has a mandate to develop a vision for collective First Nations control and full management of their resources.

"We needed to do some modernizing to the current regime that we have," says Fox. "The act is some 35 years old and it's never really been updated or modernized since its inception. We've tried to make some changes to the (regulations), but really weren't able to do much."

While the new law goes through Parliament, Ottawa and the IRC are also developing a First Nations energy-business centre, including renewable energies.

Fox says IRC members are keen to take advantage of opportunities on reserves and traditional First Nations lands.

"To date, we've been limited to being royalty receivers, having others manage our resource for us, and really not getting that full opportunity to become involved on the business side," says Fox. "We have some leaders, some First Nations, who have really gotten more involved on the business side of the oil and gas sector and we're seeing successes. But there is room for a lot more success."

He says the new business centre has more pertinence for IRC members. It will allow members to contact experts, including geologists, environmental scientists and business developers and provide employment opportunities with First Nations or oil and gas companies.

"We've been working on this (revised law) for the past few years, and (the IRC and Ottawa) felt it was time to have some faith with each other and proceed with the process."

Fox says some members were initially concerned the new law would simply pass provincial rules onto reserves. But Strahl has assured them that federal laws will apply.

Fox says the proposed new rules are tougher than existing ones, but they are no tougher than other federal and provincial regulations - and they will make things clearer for all parties.

"It's nothing that is going to surprise the oil and gas sector," he adds. "I think it is going to make it easier for them to do business."

The Indian Oil and Gas Act changes come after the Supreme Court of Canada, Alberta Court of Appeal and other jurisdictions have made rulings that call for more consultation between oil and gas producers and First Nations.

"(Producers) have to consult on every dot of land (including off-reserve lands) that they now get access to," says Andrew Boland, an oil and gas industry analyst with Calgary-based Peters and Co. Ltd.

"People (in the industry) have been complaining about it for at least a year. It has slowed down the whole regulatory process. It just increases the cycle time between idea and spud (first time a well is drilled)."

But Fox says increased consultation actually helps avoid a lot of extra work, because producers can deal with one owner of surface and sub-surface rights. On non-reserve lands, they must negotiate with several groups, including the Crown and landowners, that hold separate rights.

Kelsy Uhryn, a spokeswoman for Indian Oil and Gas Canada (IOGC), the federal agency that regulates oil and gas activity on reserves, says the amendments will make it easier for her group to conduct business.

"We have the core areas for change and they are the powers related to making regulations, audit powers, establishment of a federal limitation period and rules around royalties and royalty payments."

IOGC collects royalties on behalf of First Nations and forwards the funds to them. The agency collects related administration fees, but does not receive a share of royalties.

"One of the big ones would be a comprehensive enforcement system, which we currently don't have," says Uhryn. "Another core area is trespass. We've also addressed environmental protections. The final one is authority to issue replacement leases for lands added to reserves. Those lands may already have oil and gas leases."

In cases where oil and gas plays are on parcels of land added to reserves, replacement leases would likely be issued and they would by administered by Indian Oil and Gas Canada, instead of a province or territory.

The proposed Indian Oil and Gas Act changes come as the Canadian Association of Petroleum Producers (CAPP) is forecasting oilsands will help boost total Canadian production to at least 4.5 million barrels (bbls) per day by 2020 from 2.7 million in 2007 under its moderate-growth assumptions.

The Calgary-based group also offered a pipeline-planning case that forecasts production of five million bbls per day by 2020 - if proposed lines to the U.S. are built.

CAPP lowered its initial 2020 estimate because of regulatory changes, such as the Alberta government's new royalty regime, climate change initiatives, and pressure on labour and materials.

"Even in this scenario of higher prices, we are seeing oilsands in the same extent, but slower than we saw last year," says CAPP vice-president Greg Stringham. "So the actual numbers are down slightly. It's just the fact that they are being developed over a longer time period."

Higher prices and new discoveries like the Bakken formation, situated beneath southeastern Saskatchewan, southwestern Manitoba and North Dakota, have flattened conventional production over the past two years, he says. But overall output will fall in the Western Canada Sedimentary Basin, where reserves are declining - unless there are significant other finds.

But U.S. demand will increase because of the anticipated increases in oilsands production.

"We went down and surveyed all of the refineries in Eastern Canada and in the Eastern U.S.," says Stringham. "They are now really looking to turn their attention to this growth in oilsands (production) and getting ready for it."

(Monte Stewart can be reached at monte@businessedge.ca)